Off Early Cheaps, But Still Comfortably Lower

The ACGB space found a bit of a base around the previously outlined pull back in oil markets, owing to the an FT source report which suggested that “Saudi Arabia has indicated to western allies that it is prepared to raise oil production should Russia’s output fall substantially under the weight of sanctions.” The subsequent dip in crude oil prices took some of the stagflation worry out of wider markets, at least on a very incremental basis. Still futures have coiled in the time since, operating a touch above the early session lows, after initially showing through their respective overnight troughs in early Sydney trade. That leaves YM -10.0 and XM -7.5 at typing, with the bear flattening on the wider cash ACGB curb a little more pronounced, as 30s run ~5.5bp cheaper on the day. EFPs are wider again today, with the 3-/10-Year box bull flattening (3s +~2.5bp, 10s +~1.5bp). Meanwhile, bills run 2-13bp cheaper through the reds.

• Local news flow has been fairly inconsequential for markets, with Energy Minister Bowen flagging the difficulties that Australia faces in the energy sphere at present, ahead of a state ministerial level meeting re: the matter, scheduled for next week. Bowen stressed that the government will do what it must to ensure the reliability and affordability of the domestic energy markets.
• Elsewhere, the latest Australian monthly trade balance reading provided a slightly wider than expected surplus in the month of April, with imports moderating a touch in M/M terms.